Innovations and Export Performance of New EU Member States
Innovations and Export Performance of New EU Member States

Summary/Abstract: The paper analyzes the relationship between different forms of innovations and export performance of firms located in Central Eastern European countries, the new member states (NMS) of the European Union (EU). The analytical framework refers to the new trade theory literature based on the model that stresses the importance of firm productivity in entering the export markets. The authors treat innovations as a key factor that determines firm’s productivity. The measures of innovative activity of companies can include both spending on R&D as well as its effects, such as different forms of innovation: product, process, marketing, organizational and managerial. The authors try to assess the significance of these four forms of innovations for exports. The empirical analysis is based on the probit models, applied to the BEEPS V firm level data set covering the period 2011–2014. The preliminary results indicate that the probability of exporting is positively related to both product and process innovations, while the marketing and managerial innovations do not seem to affect export performance of firms. Next, the authors analyze the importance of innovations controlling for labor productivity, firm size, the share of university graduates in productive employment, foreign capital participation, and the use of foreign licenses.

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